Correlation Between NORDIC HALIBUT and COMINTL BANK

Can any of the company-specific risk be diversified away by investing in both NORDIC HALIBUT and COMINTL BANK at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NORDIC HALIBUT and COMINTL BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORDIC HALIBUT AS and COMINTL BANK ADR1, you can compare the effects of market volatilities on NORDIC HALIBUT and COMINTL BANK and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NORDIC HALIBUT with a short position of COMINTL BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDIC HALIBUT and COMINTL BANK.

Diversification Opportunities for NORDIC HALIBUT and COMINTL BANK

0.19

Correlation Coefficient

NORDIC HALIBUT  COMINTL BANK

Average diversification

The 3 months correlation between NORDIC and COMINTL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and COMINTL BANK ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMINTL BANK ADR1 and NORDIC HALIBUT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NORDIC HALIBUT AS are associated (or correlated) with COMINTL BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMINTL BANK ADR1 has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and COMINTL BANK go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and COMINTL BANK

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the COMINTL BANK. In addition to that, NORDIC HALIBUT is 1.26 times more volatile than COMINTL BANK ADR1. It trades about -0.14 of its total potential returns per unit of risk. COMINTL BANK ADR1 is currently generating about -0.02 per unit of volatility. If you would invest  132.00  in COMINTL BANK ADR1 on September 12, 2024 and sell it today you would lose (4.00) from holding COMINTL BANK ADR1 or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NORDIC HALIBUT AS  vs.  COMINTL BANK ADR1

NORDIC HALIBUT AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORDIC HALIBUT AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COMINTL BANK ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMINTL BANK ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COMINTL BANK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NORDIC HALIBUT and COMINTL BANK

The main advantage of trading using opposite NORDIC HALIBUT and COMINTL BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORDIC HALIBUT position performs unexpectedly, COMINTL BANK can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in COMINTL BANK will offset losses from the drop in COMINTL BANK's long position.

The idea behind NORDIC HALIBUT AS and COMINTL BANK ADR1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.